Meta's Fees for Metaverse Sales Blow Away Apple's App Store
Meta will charge a cumulative 47.5% fee to creators that make sales on their platform after Zuckerberg criticized Apple's 30% fee.
Platform fees have been a hot topic in the tech world over the past year, primarily because of Epic Games’ lawsuit against Apple. Apple’s app store charges a 30% fee to sellers, which many thought was exorbitantly high – including Mark Zuckerberg. In November 2021 post, Zuck said:
As we build for the metaverse, we're focused on unlocking opportunities for creators to make money from their work. The 30% fees that Apple takes on transactions make it harder to do that, so we're updating our Subscriptions product so now creators can earn more.
It turns out Zuck decided that fee was just right, because 30% is exactly how much the platform fee is for sales on Meta Quest, the VR system previously called the Oculus Quest. On top of the platform fee, Meta charges an additional 25% sales fee (on the remaining 70%) for every sale made in the virtual world, Horizon Worlds, which Meta operates. That means for each sale made on a Meta Quest machine, running in Horizon Worlds, the creator will be paying Meta 47.5% of the sale price.
Meta is quick to point out that they expect others to integrate their own VR machines with Horizon Worlds, in which case the platform fee would not be charged by Meta. Any platform fee would be determined by the other party making the VR headset.
The State of Meta’s VR
Meta has bet the company on the metaverse (see: name). The metaverse, as Meta imagines it, is “the next evolution of social connection.” A 3D virtual reality (VR) space that “will let you socialize, learn, collaborate and play in ways that go beyond what we can imagine.”
The company spent $10.3B on the metaverse in 2021, and Zuck has said this investment is not slowing down in 2022. The $10B expense slashed Meta’s quarterly profits by 8%, and resulted in the stock dropping some 26%. The investment hasn’t all gone to waste though; Meta has the most successful VR headset in the Meta Quest. Its virtual reality division, Reality Labs, brought in $2.2B in 2021, roughly doubling revenue from each of the previous two years.
Meta recently released a video of a virtual reality panel between Zuck and some of the creators on the Horizon Worlds platform. They highlighted playing games, having round table meetings, attending guided meditation classes, and (confusingly) going to a Wendy’s. Their choice to highlight eating, one of the few things that cannot translate to the Metaverse, is anyone’s guess.